But I always try to make the comparables more apple to apple.
If I were to buy an income annuity for 20 year period certain (in other words – it pays for 20 years, not a month more or less – benificiaries get it if you die sooner.)
An annuity that pays $8750/month for 20 years would cost you: 1,558,361. (This is from immediateannuities.com plugging in single male age 40).
Then you have to look at taxes. If you take the lump sum, and pay taxes on it – it’s mostly taxed at the maximum bracket. So you have a one time huge hit. If you take the annuity – that’s $105k/year – which means a much smaller portion of the money is taxed at the high rate. (Especially if you quit your job).
So… after doing the math – I’d do the annuity, and invest it in index funds. (And push my retirement sooner.)
